The Institute of Directors, the main lobby group representing UK bosses criticised the “highly inappropriate” pay packets awarded to directors running the now-collapsed construction giant Carillion.
The Institute of Directors also accused directors and shareholders of the stricken firm of failing to provide “appropriate oversight” of the company, which is involved in a host of major government projects and vital public services and slumped into compulsory liquidation on Monday.
"The relaxation of clawback conditions for executive bonuses in 2016 appears in retrospect to be highly inappropriate. It does no good to the reputation of UK business when top managers appear to benefit in spite of the collapse of the organisations that they are responsible for.” Roger Barker, head of corporate governance at the Institute of Directors, said. His comments on clawback refer to a change in the company’s pay policy made in 2016 that limited the criteria under which the company could demand the repayment of executive bonuses. Previously the firm could ask for cash back if the business went bust but the revised policy said it could only do so in the event of gross misconduct or if the financial results had been misstated.
Richard Howson, Carillion’s former chief executive from 2012 until a shock profit warning last July resulted in his stepping down. Howson earned £1.5m in 2016, including £591,000 in bonuses. He continued to work for the firm until last autumn after stepping down as chief executive and is due to stay on the payroll, receiving his £660,000 salary and £28,000 benefits for another year, until October 2018.
Howson’s replacement, the interim chief executive, Keith Cochrane, was a Carillion non-executive director who joined the company in July 2015. He was due to step aside in favour of a new permanent chief executive next week – but Cochrane is also set to keep on receiving his £750,000 base salary until July.
The former finance director Zafar Khan, who stepped down last September from his £425,000 a year job, is also due be paid until July.